Next Shoe To Drop: Shoddy Solar Panels From China

The photovoltaic industry is in a perverse situation. To make power generation from solar competitive, prices of solar panels had to come down. Tens of billions in subsidies were plowed into the industry. Technological advances came along. And the price per watt crashed exponentially, from $76 in 1977 to about $7 in 1989. Then it leveled off. By 2000 it began to drop again, hit $4 in 2005, $2 in 2010, and a forecast $0.74 per watt in 2013 (graph).

But it wreaked havoc. Business models collapsed. Funding dried up. PV companies bled red ink. In the US, a slew of them, including Solyndra, went bankrupt. Others shut down or changed course. Tens of billions in taxpayer subsidies and investor capital spiraled down the drain.

In Germany, solar power was a political priority. They don’t have much sun, but they have more sun than oil, the logic went. Now even Bosch Solar Energy AG is fleeing the business after burning through $3.1 billion. Same story in France, in Spain. Bloodletting everywhere. They all blamed the low prices of Chinese solar panels. Complaints that led to anti-dumping proceedings in the US and aggravated the trade war between the EU and China [my take: Germany Fires Salvo In Sino-European Trade War ... At Brussels].

But solar power generators, from utilities with large-scale installations to farmers with solar panels on their barns, were ecstatic about the low prices. They enjoyed subsidies, nearly free financing, and the hope that the system would more than pay for itself over the course of its 25-year life span. It would be a good deal.

But it might not be. The price war that Chinese manufacturers waged was a suicide mission. Now even they’re going bankrupt, including their erstwhile number one, Wuxi Suntech, when the banks pulled the ripcord in March. Existentially threatened, they cut costs ... and corners.

Defective solar panels can be costly. The New York Times described what happened to the PV installation on a warehouse roof in Southern California whose promise of a 25-year life span disintegrated along with the protective coatings on the panels after only two years, and part of it went up in smoke when defects caused two fires.

“Worldwide, testing labs, developers, financiers, and insurers are reporting similar problems and say the $77 billion solar industry is facing a quality crisis,” the Times reported. But instead of tracking defects industry-wide, manufacturers hide behind confidentiality agreements that treat their name as a secret. So no one knows the extent of the crisis. And it’s just the beginning: since nearly half of the 7.2 gigawatts of capacity in the US were installed in 2012 in a burst of incentive-fueled activity, most of the problems have not yet come to light. But some have:

Executives at companies that inspect Chinese factories on behalf of developers and financiers said that over the last 18 months they have found that even the most reputable companies are substituting cheaper, untested materials. Other brand-name manufacturers, they said, have shut down production lines and subcontracted the assembly of modules to smaller makers.

STS Certified, a French testing service, evaluated 215,000 PV modules at its Shanghai laboratory and found that defects had jumped from 7.8% in 2011 to 13% in 2012. An entire batch from one manufacturer was defective, but STS refused to identify the culprit – a company listed on the New York Stock Exchange – due to the confidentiality agreements.

German solar monitoring firm Meteocontrol found that 80% of the installations in Europe it had examined were underperforming. SolarBuyer, based in Massachusetts, audited 50 Chinese plants over 18 months; defect rates ranged from 5.5% to a dizzying 22%. During repeat audits, it found that plants were constantly substituting cheaper materials. Ian Gregory, SolarBuyer’s senior marketing director, warned: “If the materials aren’t good or haven’t been thoroughly tested, they won’t stick together, and the solar module will eventually fall apart in the field.”

Even Chinese insiders admit it: “There are a lot of shortcuts being taken, and unfortunately it’s by some of the more reputable companies, and there’s also been lot of new companies starting up in recent years without the same standards we’ve had at Suntech,” lamented Chief Technology Officer Stuart Wenham – the same Suntech that was pushed into bankruptcy in March.

There are still some lucky solar developers and installers who claim that they haven’t run into quality problems yet on systems installed in 2012. But they’re brand-new, with 24 more years to go. And some of the defective panels weren’t made in China; all manufacturers are under pressure to cut corners in order to survive. First Solar, a US company, has reserved $271 million to account for the expense of replacing defective modules sold in 2008 and 2009. No word yet of those sold during the binge of 2012.

The costs of these defects will eat further into the industry that is struggling to become financially viable. Yet, in a cruel twist, the price of solar panels must continue to drop for solar power to be competitive without subsidies. Taxpayers, stung by austerity in Europe and by the sequester in the US, are already less than enthusiastic about propping up the industry forever. At some point, it must be able to stand on its own, at still lower prices that magically allow manufacturers, and not only power generators, to thrive – an illusion, for now. But waves of “cheap” solar panels that suddenly become very expensive after they’re installed will cause more bloodletting and push the propitious date further into the future.

China pops up everywhere. Aircraft maintenance was once a highly paid blue-collar job that required education, training, and manual skills. A perfect American middle-class job with healthcare, retirement, and vacation benefits; and free flights! Working for icons like Delta, American Airlines, Continental, TWA, or Pan Am! Icons indeed. Read.... When Flight Safety Gets Outsourced To China

I went online to look for a solar panel that is supposed to be cheap now. So much stuff is out there and there is no way to tell good from bad. Very few have complete packages that do anything useful. I assume this is just various resellers just dumping panels. This is like the early days of PCs, waiting for Wordstar and Lotus 1-2-3. Someone is going to have to standardize how to hook multiple panels together, and how to connect them to something that performs a useful function. Any of the ones that come close to doing this today are drowned out by all the other similar useless products out there.

Workaround: install wind power, if it makes sense for your area, solar water heaters with an indoor thermal water bank which can be bypassed in summer, heat with wood, heat water with that wood fire in winter, turn off the damn lights and devices when you're not using them, and spend some time outside.

I have a small solar panel on my greenhouse. It turns the fan on my vent window. When its hot and sunny, it spins like hell. When its cold and the heated wax driven piston contracts and closes the vent window, it slows down. That's about the only residential solar application that makes sense to me, even at a buck a watt.

Beware when something is being subsidized - it indicates that there is a fundamental problem that the product can not compete. Giving the producers a subsidy discourages them from doing any R&D an coming up with a technical solution.

We can look at ethanol subsidies. It is not break-even in thats the energy contained in the final product is less than the energy used to produce it. Brazil produces a much better product using sugar cane.

We can also look at the Chevy Volt - can't compete with a Prius, a car that people like and want to buy.

Ray Kurzweil is looking at a technology whereby "solar panels" would grow on trees, using genetically engineered leaves. However, this is unlikely to get off the ground while Congress believes that money grows on trees.

I started this project in 1999. My 3000 Watt system went online in 2000 and for 6 years it was pretty much a disaster. On August 13th, 2007 I discovered that the manufacturer of the panels (Kyocera) was willing to swap the defective panels they had sold me for new ones. I still wonder why Arizona Wind & Sun never mentioned this known problem to me. Time will tell if things have improved.

What could go wrong with an army of idiots financing disposable power plants with a longer payoff than the plants predicted* lifespan? (and that's assuming the cells last as long as they say they will and produce as much as they say they produce)

BTW most of the solar installations in CA aren't metered, you get subsidized based on design specs, not actual watt production, the whole gig is a financial fraud.

While I understand the financial fraud, I am not certain what you mean by "aren't metered". The vast majority use net-metering.

As to financial fraud it is far more insideous then one imagines.

The scam works like this: The presumption is that energy prices will go up 40% over the next 5 years.

I will give you an entire solar electric system for $21,000 which you finance over the next 20 years at 6 to 8 % interest. You pay the financing and for the amount of eleectricity beyond the production of your solar electric system. You pay the aveage rate for this excess which is around 16 cents per KwH. The financed amount includes warranty and maintenance.

All in all, the numbers look good spread over the 20 years. You might even get some amount of rebate dollars from the Fed and State too. Lowering the cost of the system by 1/3rd to about $14,000.

However, the system you purchased probably cost me (the installer) about $5000 to $7500 including installation.

Now aside from the $7000+ check you wrote me as profit up front, along with the finacing you are paying over 20 years ($19,000+ in interest) , I have one more trick up my sleeve.

When you consume more energy than you produce you are paying me 16 cents per KwH. However, because of the way PG&E does tiered billing, I am paying in the range of 9 to 12 cents per KwH.

Now I could lose some of my profit if you suddenly installed a pool and heated it electrically to 104 degress. But guess what? The contract says you will maintain your projected energy usage and if you deviate in a way that eats into my profits you simple pay more.

Guess what else I capture? Every time you make an energy improvement in your home, LED lights, new fridge, I get the monetary benefit not you.

And here is a bonus if you read this far: That solar electric system I sold you, and you think will operate when the power goes out ... Nope. The Sun may be shining but when the service power goes out your system will be as dead as a door nail. Feel free to read UL1741. Well that costs too.

By the way, I take all my ill gotten gains and by PMs.

Does every seller have a 200% margin? Are they all pulling the financing scam? Or the excess electricity trick? Probably not, but some do it all, and many are doing some of it, and perhaps somewhere there is a fair deal to be had. I have no idea where.

assuming you don't need to finance and have the money in a zero interest ZIRP account investing in solar makes sense. also there's no reason you can't convert into a self sufficent solar system, but who wants all those batteries? if i lived in a part of the country where power dropped for days at a time i would do that. if you can buy the system for cash you are earning 5% a year in my neighborhood, better than bernanke bonds..

I was looking at Kyocera and Sharp polysilicon panels, along with some CIGS fabric panels and some peel-and-stick flexible panels for good measure. Let's how the People's Liberation Army of China doesn't have ALL of those panel markets covered, otherwise my efforts at Going Galt may be going south...

Good riddance. Solar for grid power is a stupid idea anyway. Ditto wind. If we'd invested all the r&d in thorium based fission, we'd have a safe, endless supply of grid power at competitive cost that doesn't require covering vast swaths of the country with big ugly panels and propellers.

40 years ago, when the current generation of nuclear reactors were being designed, no one could imagine a little rectangle of plastic and glass that fits in your pocket could be a phone, camera, and computer.

People can talk their selves out of anything including, what is right or makes sense.

I would rather count on me and get the job done and tell the power monopolies to stick it (done) then whine and cry that somebody has to give me money and make me jump through hoops with mutitudes of bullshit but thats just me.

You forgot another (very) important (and often ignored) aspect of solar energy: sun tends to shine mostly in dry regions (or vice-versa) and these also tend to be (naggingly) dusty; dust, for its part, both airborne and more importantly deposited, tends to cut light transmission, and the only way around this is through frequent (and costly) washing. Result is you'll probably end up with either a severely under-performing installation or (significantly) higher than expected costs.

I helped install a neighbor's 7.5kw ground installation (grid tie) in 2009 - the fair value tax credits paid for 65% of the hardware cost and he has no power bill, no maintenance cost other than a quick wash with a hose weekly to remove dust and bird poop. Canadian Solar panels, Enphase microinverters, and no worries. Production is about 60 kw hours for a full-sun day and the grid is his battery. A cloudy day cuts this in half, but 30 kwh isn't too shabby.

Solar panals degrade very slowly over their life - not 25 years, but more like 40 - 50. Long after they have paid for themselves. Keeps on ticking. Solar Good.

Are you an idiot by nature or by choice - have you even read the original article (or the one I posted)? Canada isn't particularly sunny (that I know...), so I suspect dust might no be a primary problem there, but maybe I'm just being "ignorant"...

Also being taxpayer funded it's cost isn't being cost effective, just being "socialist", to use a recurrent meme - simple example: if everyone took advantage of it, a 100% funding would effectively result in 0% funding.

Life is not economical. Life has no long term prospects, there are large investments required up front with no promise of return, and once costs are sunk there is no easy way to get them back (prostitution being the one exception that leaps to mind.)

Those who deploy capital without any hope of a return, are wasting, not investing.

From the very start, it was glaringly apparent that solar, and wind power have no serious near-term (next 50 years) value - except in specific cases. The fact that all of these so-called "alternative energy" sources have needed governement subsidies at all stages in the game, is proof-positive of this. Manufacture of components, installation of components, and ridiculous rates (some ove 80c/Kwh in Ontario) are being paid by the local utilities. This is all being subsidized by the taxpayer.

Now what's going to happen to the dufus who signed a 25 year contract @ 80c/Kwn, but his solar panels burn up, and the manufacture no longer exists to honor a warantee? Hopefully they go for the jugular, and bankrupt him in the process of getting back every cent they've paid for over-priced hydro.

Everyone producing power gets a subsidy. If the price of conventional power production included the direct health costs to society of particulate and water pollutants (in the 100's of billions) and the now-accepted costs of climate change (certainly will be in the trillions) then the cost of coal and natgas produced electricity would be much much higher.

totally agree with this...don't understand the down arrows. "some energy metrics produce more liquidity than others" of course. that's why Wall Street loves oil and natural gas. talk about "merchant providers." can't produce too many gas guzzlers can they! seems the author agrees as well. hmmm. no surprise there. "imagine a Government solution that worked." one that involved in LOWER prices. haven't had that in 70 years that's fer sure. and that's why Washington loves Wall Street..."they pay for all that Government by making everything unaffordable." gee, thanks! "you're service to the war effort is duly noted"!